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EXHIBIT 10.32
RETENTION AGREEMENT
This Retention Agreement (the "Agreement") is made and entered into as
of February 19, 1999 (the "Effective Date"), by and between General Magic, Inc.,
a Delaware corporation (the "Company"), and Xxxxx X. XxXxxxxxx (the
"Executive").
1. TERM OF RETENTION PERIOD. This Agreement shall become effective
as of the Effective Date and shall continue until the earlier of the date the
Company terminates the Executive without cause (as defined in Section 5 below)
or the date occurring six (6) months after the Effective Date (the "Term Date").
For the purposes of this Agreement, Executive may elect to treat his removal
from the position of Chief Operating Officer for other than cause as a
termination without cause. During the term of this Agreement, the Executive
agrees that he will not seek or accept employment with an employer other than
the Company. The Company and the Executive may extend the term of this Agreement
upon such terms as they mutually agree.
2. POSITION AND DUTIES. During the term of this Agreement, the
Executive shall continue to be employed by the Company in his current position
at his current salary rate; provided, however, that upon the Effective Date, the
Executive shall be appointed as the Chief Operating Officer of the Company. Such
appointment will be announced on a date determined by the Company and that is
acceptable to the Executive. During the term of this Agreement, the Executive
agrees to devote his full business time, energy and skill to his duties at the
Company. These duties will include the duties described in Exhibit 1 attached
hereto and any other duties consistent with his position which may reasonably be
assigned to Executive from time to time.
3. ACCELERATION OF VESTING OF STOCK OPTIONS. The Company granted
the Executive two (2) stock options on June 12, 1997 (Option Numbers 001300 and
001301) (the "Options"). As of the date hereof, approximately 99,144 shares
subject to Option Number 001300 are unvested and approximately 21,690 shares
subject to Option Number 001301 are unvested. The vesting of the shares subject
to such Options shall be accelerated as follows:
(a) If, after the Effective Date and prior to March 10,
1999, the Company executes a letter of intent or similar agreement providing for
a financing transaction in which the Company is to receive gross proceeds of at
least $15,000,000 on terms acceptable to the Board of Directors of the Company,
then a total of 60,000 of the unvested shares subject to Option Number 001300
shall become vested as of the date of such execution by the Company, regardless
of whether the anticipated financing is consummated.
(b) On the Term Date, an additional 60,834 unvested shares
subject to the Options (or, if lesser, the aggregate number of unvested shares
subject to the Options) shall become vested.
(c) The Executive acknowledges that to the extent that
either Option was an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, the acceleration of vesting described above
may cause the exercise of such Option to be treated as the exercise of a
nonstatutory stock option to the extent required by Section 422. The Executive
is encouraged to consult with his own tax advisor regarding the tax treatment of
his Options.
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4. BONUS. On the Term Date, the Company shall pay the Executive a
bonus in an amount such that the net payment retained by the Executive, after
withholding of any applicable federal and state income taxes (at 39.60% and
5.62% respectively) and any applicable employment taxes, shall be equal to
$200,000.
5. CONDITION TO RECEIPT OF BONUS AND ACCELERATION OF VESTING.
Executive shall be entitled to the acceleration of vesting of the Options
pursuant to Section 3(b) and receipt of the bonus described in Section 4 unless,
prior to the Term Date, the Executive voluntarily terminates his employment with
the Company or the Company terminates Executive's employment for cause. For
purposes of this Agreement, "cause" shall mean any of the following: (a)
Executive's theft of any Company property or intentional falsification of any
employment or Company records, (b) Executive's improper disclosure of the
Company's confidential, business or proprietary information, (c) Executive's
consistent failure, as determined by the Board of Directors, to perform the
duties of his position, provided that the Executive is first given a written
warning detailing the failure of performance and does not correct such failure
within fifteen (15) days of his receipt of the warning, (d) Executive's
acceptance during the term of this Agreement of employment with an employer
other than the Company or any successor thereto, or (e) Executive's conviction
(including any plea of guilty or nolo contendere) for a felony or other crime
involving moral turpitude which impairs the Executive's ability to perform his
duties for the Company.
6. DEATH OR DISABILITY. In the event of the death or disability of
the Executive during the term of this Agreement, Executive or his estate, as
applicable, shall be entitled to the acceleration of the vesting of the Options
pursuant to Section 3(b) and receipt of the bonus described in Section 4 on a
pro-rated basis from the Effective Date through the date of such death or the
commencement of a disability. For purposes of this Agreement, "disability" shall
mean the Executive's inability, as determined by a qualified physician
acceptable to the Company, to perform the essential duties of his position for a
period of sixty (60) consecutive days by reason of a physical or mental illness,
injury or disease.
7. CHANGE OF CONTROL. Executive shall be entitled to the
acceleration of vesting of the Options pursuant to Section 3(b) and receipt of
the bonus described in Section 4, effective ten (10) days prior to a change of
control. For purposes of this Agreement, "change of control" shall mean the
occurrence of any of the following events: (a) the direct or indirect sale or
exchange by the stockholders of the Company of all or substantially all of the
stock of the Company where the stockholders of the Company before such sale or
exchange do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company after such sale or
exchange; (b) a merger in which the stockholders of the Company before such
merger do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company after such merger; or (c)
the sale, exchange, or transfer (including, without limitation, pursuant to a
liquidation or dissolution) of all or substantially all of the Company's assets
(other than a sale, exchange, or transfer to one (1) or more corporations where
the stockholders of the Company before such sale, exchange, or transfer retain,
directly or indirectly, at least a majority
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of the beneficial interest in the voting stock of the corporation(s) to which
the assets were transferred).
8. CONFIDENTIALITY. The Executive acknowledges and agrees that the
fact, terms and conditions of this Agreement, as well as the discussions that
led to this Agreement (collectively referred to as "the Retention Information"),
are confidential, and that the Executive shall not disclose the Retention
Information or any part thereof, to any person or entity, except to his spouse,
his attorney, and his accountant, provided that such person agrees to be bound
by the terms of this confidentiality provision.
9. MISCELLANEOUS PROVISIONS.
(a) APPLICABLE LAW. The Executive and the Company agree that
this Agreement shall be interpreted in accordance with and governed by the laws
of the State of California.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
(c) NOTICES. Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Executive, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.
(d) SEVERABILITY. In the event that any provision of this
Agreement shall be found unenforceable by a mediator, an arbitrator or a court
of competent jurisdiction, the parties hereto shall determine a reasonable
modification to such provision to the extent necessary to allow enforceability
of the provision. If a modification of the provision is not satisfactory in the
judgment of such mediator, arbitrator or court, the unenforceable provision
shall be deemed deleted, and the validity and enforceability of the remaining
provisions shall not be affected thereby.
(e) MEDIATION AND ARBITRATION. In the event of any dispute
or claim relating to or arising out of this Agreement, the Executive and the
Company agree to mediate such dispute or claim with a mediator acceptable to
both parties. In the event that the parties do not resolve such dispute or claim
pursuant to mediation within sixty (60) days, the parties hereby agree that all
such disputes and claims shall be fully, finally and exclusively resolved by
binding arbitration conducted by the American Arbitration Association ("AAA") in
Santa Xxxxx County, California in accordance with AAA's National Employment
Dispute Resolution rules as those rules are currently in effect, and not as
those rules may be modified in the future. The Executive and the Company hereby
knowingly and willingly waive their respective rights to have any such disputes
or claims tried to a judge or jury. Notwithstanding the foregoing, this
arbitration
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provision shall not apply to any disputes or claims relating to or arising out
of the actual or alleged misuse or misappropriation of the Company's property,
including, but not limited to, its trade secrets or proprietary information.
(f) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(g) INTEGRATED AGREEMENT. This Agreement, the agreements
between the Company and the Executive evidencing the Options, and the
Proprietary Rights and Information Agreement between the Company and the
Executive constitute the entire understanding and agreement of the Executive and
the Company with respect to the subject matter contained herein and therein and
supersede any prior agreements, understandings, restrictions, representations,
or warranties among the Executive and the Company with respect to such subject
matter other than those as set forth or provided for herein or therein.
(h) MODIFICATION. This Agreement may only be modified or
amended by a written agreement signed by the Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.
GENERAL MAGIC, INC.
By: /s/ Xxxxxx Xxxxxxx
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Title: Chairman, CEO and President
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EXECUTIVE:
/s/ Xxxxx X. XxXxxxxxx
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Xxxxx X. XxXxxxxxx
2/19/99
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EXHIBIT 1
MANAGEMENT BUSINESS OBJECTIVES
1. Manage the Company's finance and accounting functions in accordance with
the Executive's current responsibilities and duties as Chief Financial
Officer.
2. Manage Network Operations and Customer Support to yield a World Class
Operations Center capable of supporting all products and services of the
Company.
(a) Ensure execution of the 1Q99 Operations Plan (milestones as per
plan).
(b) Ensure creation of each quarterly operations plan and its
execution.
3. Ensure the creation and/or modification of the Company's billing systems
to support all of the Company's products and services.
(a) Drive the modification of pricing structure to ease the billing
system's processing issues.
(b) As the primary customer for the Billing System, drive the
requirements into the Billing Program Team and ensure
understanding of those requirements.
4. Create a world class MIS department.
(a) Integrate the operations center MIS need with the needs of the
Company as a whole and develop a plan to properly support both.
(b) Organize the MIS functions to maximize efficiency of personnel,
upgrade personnel as needed to get best service, and ensure
support of the World Class Network Operations Center.
5. Improve communications.
(a) Consciously and consistently communicate support of the Company
and its management team through departmental meetings and
one-on-one conversations.
(b) Drive development of IR presentations and the training of key
management and other personnel in delivering the financial
message.
6. Raise the cash the Company needs for 1999.
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(a) Negotiate an LOI for $15 million prior to March 10, 1999 on
terms acceptable to the Company's Board of Directors, in its
sole discretion.
(b) Negotiate an LOI for up to an additional $15 million prior to
July 1, 1999, as needed, on terms acceptable to the Company's
Board of Directors, in its sole discretion.
(c) Assist Xxxxx Xxxxxx and Xxxxx Xxxxxxx in discussions and
negotiations for raising at least another $20 million from
strategic partners.
7. Drive Security Policy for the Company.
(a) Chair the Security Policy Committee.
(b) Form a VP-level security organization reporting to the COO
(1Q99).
(c) Implement recommendations of the IBM Security Audit as approved
by the Security Policy Committee.
